Thursday, May 29, 2014

Baron Funds Comments on Yandex N.V.

Yandex N.V. (YNDX) is the leading search engine provider in Russia. The stock was a detractor in the first quarter due to a decline in the Russian ruble and rising geopolitical tension over Crimea. Although we expect the conflict to negatively impact the company's growth rate going forward, we continue to hold shares in Yandex due to, in our view, its strong competitive positioning and positive long-term growth prospects relative to its current valuation.

From Baron Funds' first quarter 2014 commentary.

Also check out: Ron Baron Undervalued Stocks Ron Baron Top Growth Companies Ron Baron High Yield stocks, and Stocks that Ron Baron keeps buying
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Wednesday, May 28, 2014

What Drives Retirement Rollover Decisions When Workers Leave a Job

What workers do with their employer-based retirement savings accounts when they change or leave jobs largely depends on whether they retire or stay in the work force, according to a just-released report by the Employee Benefit Research Institute.

EBRI’s analysis — which was based on 2008 and 2010 data from the Health and Retirement Survey (HRS) and focused on the financial behavior of job changers older than 50 — found that among those still in the labor force, the most common outcome was to leave it in the previous employer’s plan, while among those who retire, the most common choice was to take the money.

However, EBRI’s report, “Take it or Leave it? The Disposition of DC Accounts: Who Rolls Over into an IRA? Who Leaves Money in the Plan and Who Withdraws Cash?” also found that other factors also play a role in influencing workers’ choice.

For instance, the report found that a decision to take a cash withdrawal of accumulated savings declined with higher account balances, higher incomes, existing ownership of an individual retirement account (IRA) and higher financial wealth, while the decision to take a cash withdrawal rose with debt levels.

In contrast, the decision to roll over a DC distribution (typically from a 401(k) to an IRA) is “the mirror image of the characteristics influencing cash withdrawals: Rollover decisions increased with higher account balance, higher income, previous ownership of an IRA account, and greater financial wealth. They also declined with higher debt.”

Sudipto Banerjee, EBRI research associate and author of the report, cautioned in a statement that there is “no clear trend with respect to those variables and whether workers decide to leave their retirement balances in the prior employer plans.”

This suggests, he continued, “that there may be behavioral factors — such as inertia — driving what in some cases might be seen as a ’non-decision.’” Additionally, “those who are postponing the distribution may simply be deferring the decision until they need the money.”

Deciding what to do with a 401(k)-type retirement plan is one of the biggest issues a worker will face. The report cites that a “poor decision” would be, for example, withdrawing the money prior to age 59-½, which results in a 10% penalty in addition to income tax on that distribution. This choice “could reduce their retirement assets significantly,” the report states.

While rolling the assets to an IRA is a common way to preserve the savings, the study notes, this could also bring with it “higher investment and/or administrative costs than a 401(k) plan.”

Indeed, detecting IRA rollover abuse has become a focus for both the Securities and Exchange Commission and the Financial Industry Regulatory Authority.

IRA guru Ed Slott told ThinkAdvisor in a recent interview that it behooves advisors to educate themselves on the six options that workers can choose from when retiring or shifting jobs.

“I’d say over 90% of advisors” don't know the six options available to workers “because mostly they [advisors] begin their careers as salespeople,” and “because advisors are not trained on the tax rules — all they know is a rollover,” Slott said.

While capturing boomers’ rollover dollars is the “opportunity of a lifetime for advisors,” Slott said, advisors who fail to beef up their knowledge about helping their clients — particularly boomers — enter the distribution phase of their retirements will likely face outright loss of those clients and a failure to bring on new ones.

Of the six choices available to workers when leaving a job — roll over to an IRA, leave it in the company plan or roll to a new company’s plan, take a lump-sum distribution, make a Roth conversion or an in-plan Roth conversion — Slott said that the right choice depends on the participant’s circumstances, but “the best option is still usually the IRA rollover, to be fair to advisors.”

However, Slott warned that “there are situations where you have to ask questions, and this is where advisors need to be better educated on the options.”

---

Check out Time to Rein In Rollovers? on ThinkAdvisor.

Tuesday, May 27, 2014

Correcting your credit report gets easier

erase error (Money Magazine) You just got more of a say in fixing errors on your credit report.

Pushed by the Consumer Financial Protection Bureau, major credit reporting companies Equifax, Experian, and TransUnion have changed their complaint systems to let people dispute reports' mistakes in greater detail.

Previously, any gripes and supporting paperwork you sent the Big Three were assigned a code reducing your argument to one of a handful of assertions, such as "Not his/hers."

It was this code that was relayed to the credit card issuer or other creditor supplying the information under dispute.

How medical bills ruin your credit   How medical bills ruin your credit

Now when you provide documents, the agencies have to forward that material to the creditor, letting you state your full case.

The creditor then has to fix any errors with all three agencies, which received about 8 million complaints about errors in 2011.

The earlier system "was a brick wall," says Bill Hardekopf, CEO of comparison site LowCards.com. "This gives you some additional clout." To top of page

Why Pandora Looks Like A Dead-Money Investment

The number of companies which offer a music subscription or internet radio service seems to be growing larger every day. There's Pandora (P), which has proven to be exceptionally popular with its free ad-supported model and an ad-free subscription service. Then there's Spotify, which has a much larger library than Pandora and also offers a free ad-supported version. Pandora has about three times as many active users as Spotify does, but the company has also been around a lot longer. There's also iHeartRadio, which allows you to stream live radio, and the smaller Slacker Radio.

Here comes Google

This already crowded space got a new competitor recently as Google launched the Google Play Music All Access service. This new service is similar to Spotify, where users pay $10 per month to be able to stream an unlimited number of songs. But Google introduces some unique features, like the ability to merge your personal music library with the streaming catalog. This allows you to listen to songs which you already own in addition to Google's catalog all in the same place. The service also has a radio feature similar to Pandora's, where playlists are automatically generated.

The benefit that Google has is its already large and ubiquitous ecosystem of products and services. With Android being the dominant OS in the mobile space integrating the new music service into Google Play gives the service a big advantage over the competition.

The problem with online music

Any business model which involves paying royalties to content owners in order to serve that content is not a very attractive one. A huge portion of the revenue which these companies generate is spent on royalties, and that fact is unlikely to change anytime soon. This means that profits, if they exist at all, will necessarily be small.

Pandora and Spotify pay royalties in different ways. While Spotify negotiates directly with the content owners Pandora pays a royalty rate which is determined by the federal government. So every time Pandora plays a song it must pay a fraction of a cent in royalties, and this is the reason that the company limits its free service to 40 hours per month.

Pandora's struggles

Most of Pandora's revenue comes from selling advertisements, but thus far costs have grown just as fast as revenue. In the most recent quarter revenue jumped by an impressive 54% year-over-year but operating income fell from $-8 million to $-14 million as costs rose. This is a fundamental problem with the business model which will not go away unless federal laws are reformed.

Buying Pandora stock essentially boils down to a gamble on the actions of the federal government regarding royalty rates. You're paying $2.8 billion for a company that is not profitable and will likely never be profitable unless laws are changed. And even if royalty rates come down Pandora faces an onslaught of competition. Pandora only has about 900,000 songs in its library compared to Spotify's 20 million, putting it at a major disadvantage.

What about Apple?

Apple (AAPL) has been long rumored to be working on a music streaming service. Apple's iTunes remains popular, with the service passing the 25 billion songs mark in February. But with Google launching a service it's likely only a matter of time before Apple joins the fray. Recently rumors have emerged suggesting that Apple is close to an agreement with Universal Music Group, the largest of the major record companies, on a streaming deal.

Apple's goal with the service will be similar to Google's - locking people into the companies' respective ecosystems. Apple's service will likely have some sort of iTunes integration, meaning that users of iTunes with considerable libraries will have a reason to choose Apple over the competition. Competing with both Google and Apple in an industry like this is not exactly a recipe for success.

The bottom line

Pandora is in a world of trouble. Not only is its current business model unable to turn a profit, competition from Google and likely Apple along with the current competition from companies like Spotify puts Pandora's future in jeopardy. Investing in Pandora is almost certainly a huge mistake.

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Monday, May 26, 2014

Labor Day Sales You Should Check Out This Weekend

Nevada Las Vegas The Strip South Las Vegas Boulevard Forum Shops at Caesars Palace shopping front entrance for sale retail displAlamy There are a bunch of Labor Day sales happening this weekend. Some are great; some are underwhelming. We've separated the wheat from the chaff and gathered a few of the sales offering the best discounts. A few of these sales and deals aren't explicitly labeled as Labor Day sales, but they're still worth checking out. J.Crew is taking 30 percent off its entire stock of "final sale" items. As the name makes clear, there are no returns and exchanges on these items, so if you get it home and decide you don't like the fit, you're out of luck. To get the discount -- which is on top of previous markdowns -- just use the code HELLO30, which is good through 11:59 p.m. ET Monday. The deal is good in-stores and online. L.L. Bean will give you 10 percent off your entire order when you use the code LABORDAY10; if you're shopping in stores, there's a coupon you can print out that will get you the same discount. The retailer will also throw in an extra $10 L.L. Bean gift card for use on any subsequent purchase if your order comes to $50 or more. The deal applies to all merchandise, including sale items, and is good through 11:59 p.m. ET Monday. LivingSocial is taking 20 percent off all deals when you use the coupon code MELT20 at checkout. There's a maximum discount of $20, and the code is only good through 11:59 p.m. PT Saturday. The discount is taken off the actual cost of the daily deal not its "value," so if you're buying a "$50 for $25" deal, that means you're getting $50 worth of the product or service for $20 after the code is applied. Fab.com is taking 25 percent off everything on its site. The deal is good through Monday, and there's no code required -- the discount is taken at checkout. Express and Banana Republic are both taking 40 percent off your purchase this weekend, whether you're shopping in-store or online. Banana Republic has more exclusions on its sale -- the discount doesn't apply to cashmere or blazers, for instance. At Express, the discount applies to "every single item." Both sales last through Monday. As often happens ahead of the launch of a new iPhone, we're seeing discounts and trade-in offers on the current generation iPhone. At Walmart, you can now get an iPhone 5 for $98 with contract, a 50 percent discount. Meanwhile, the Apple Store is launching a trade-in program today that will give you good value for your old iPhone -- reportedly up to $250 for an iPhone 5, depending on its current condition. The catch is that you have to put the credit toward a new iPhone. An announcement on the new iPhone is expected Sept. 10.

Electric cycles, bikes and 'tuks' get traction

Despite America's love affair with Harley-Davidsons, electric motorcycles — as well as e-bicycles — are revving up U.S. sales.

Two-wheeled e-vehicles are gaining converts among urban commuters and law enforcement, which see a stealth advantage in their quietness. More than three dozen U.S. police departments nationwide now use e-motorcycles.

Sales of high-performance e-motorcycles will rise at least 30% per year through 2023 in North America, says a May report by Navigant Research, a market research firm. Co-author John Gartner sees several reasons: consumers looking for refuge from high gasoline prices, increases in city traffic and improved e-vehicles.

"It has its limitations. It only goes so far" on a charge, says Ron Paci, a retired carpenter in Arlington, Va., who has owned an electric Zero Motorcycle for a year. Still, he's a huge fan. "it doesn't pollute. It doesn't make any noise so if you want to drive quietly along a country road, it's a new experience."

Zero, the largest U.S. manufacturer of e-motorcycles, has boosted production from fewer than 100 units in 2010 to more than 2,000 this year, says Scott Harden, the company's vice president of marketing. Compared to gas-powered counterparts, he says Zeros are cheaper to operate — about a penny per mile — and don't make noise, fumes or vibrations.

"It's almost a magic-carpet-like ride," Harden says, noting Zeros can go 171 miles per charge in the city. He's bullish about future sales, because battery prices — accounting for half of production costs — have fallen in the last year. Zeros cost $10,000 to $17,000.

Oregon-based Brammo makes electric motorcycles, as shown here, than can go up to 110 miles per hour and as far as 128 miles per charge.(Photo: Courtesy of Br! ammo)

E-motorcycles sell best in the San Francisco Bay area, southern California, Florida and Texas, says Adrian Stewart, director of marketing for Oregon-based Brammo, which rolled out its first model in 2009.

Netherlands-based Tuk Tuk Factory is partnering with eTuk USA to bring electric tuk tuks, three-wheeled vehicles without sides but with canopies, to the United States.(Photo: Courtesy of Tuk Tuk Factory)

The U.S. market faces increased competition as BMW launches an e-scooter this year, and Yamaha plans an electric entry in 2016.

Also on the way are three-wheeled electric tuk-tuks, vehicles without sides that have canopies and are common in Asia. Netherlands-based Tuk Tuk Factory is partnering with eTuk USA, which is seeking road-use approval for three models from the U.S. Department of Transportation.

"The interest is unbelievable," says Michael Fox of eTuk USA, noting Atlanta's airport plans to use one of the units for mobile food sales. He says hungry passengers waiting for flights won't have to leave their gate, because the tuk-tuk will come to them.

E-bikes, though still a small share of all U.S. bicycles, are seeing rapid growth. More than twice as many, 158,000, were imported from July 2012 to July 2013 than a year earlier, when 65,000 entered the U.S. market, according to Edward Benjamin, chairman of the Light Electric Vehicle Association, an industry group. E-bike sales are forecast to increase nearly 10% per year through 2020 in North America, says a 2013 Navigant report.

"If I ride a pedelec up a hill, I feel 18 again," Benjamin, 59, says, referring to a type of e-bike that requires riders to pedal in order for the motor to run. The more pedaling, the longer a bike's range per charge.

He says e-bike sa! les are g! reatest among aging Baby Boomer cyclists who have trouble climbing hills and young urban commuters who don't want to buy a car but want to arrive at work without sweating. He says customers say they aim to avoid traffic jams and parking hassles.

Still, Americans aren't flocking to e-alternatives as quickly as Europeans or Asians.

"We're culturally slow in our adoption," Benjamin says. Unlike Europeans, he says most Americans drive to work and are more apt to see bicycles as a way to exercise rather than commute.

Also, Europeans are more focused on reducing greenhouse gas emissions and have more dealerships that focus exclusively on e-vehicles, Brammo's Stewart says. And in the U.S., he says there's the Harley-Davidson "phenomenon," adding "the noise and the smell are part of the attraction." He doesn't expect its devotees to switch until e-motorcyles can get 300 miles per charge.

Another hurdle is price. Harleys aside, many gas-combustion motorcycles cost less, and a federal tax incentive for e-vehicles, including motorcycles, expired last year.

Sunday, May 25, 2014

Which Billionaire Investor Has the Right Idea on The Big Banks?

Blindly following moves by the largest money managers isn't advised; however, investors may gain valuable insight by looking behind the headlines when 2 fund manager titans have divergent views on stocks in the same industry.

While billionaire George Soros saw his Soros Fund Management LLC dumped positions in banking giants JPMorgan Chase (NYSE: JPM), and CitiGroup (NYSE: C), Warren Buffett's Bershire Hathaway Group continued to hold huge stakes in Wells Fargo & Co. (NYSE: WFC) and US Bancorp (NYSE: USB).

Why such differing outlooks?

Wall Street versus Main Street banks
Behemoths Citigroup (NYSE: C  ) and JPMorgan Chase (NYSE: JPM  ) run worldwide empires reviled for exotic, financially engineered products, rapid-fire trading desks, and expensive miscues. These are among the "Wall Street banks." Some pundits argue that no one can really understand the inner workings; not even top management. They are not only "too big to fail," but perhaps "too big to manage."

However, institutions like Wells Fargo & Co.  (NYSE: WFC  ) and US Bancorp (NYSE: USB  ) never strayed from traditional "Main Street" banking business models.

Management emphasizes taking in customer deposits, and making sound community loans and mortgages. In addition, these 2 banks have little overseas exposure.

Here's a simple proof challenge: go read the "Overview" section of the most recent 10-Q filing for JPMorgan Chase and CitiGroup. Then try to explain to a novice how these institutions make money. Warren Buffett once quipped he only invests in companies "that don't take a genius to run."

Citigroup: troubles in the U.S. and Mexico
Citi took a confidence hit when Federal regulators rejected its 2014 shareholder return-of-capital plan. CEO Michael Corbat said the bank would wait until next year before resubmitting a new capital plan, thereby precluding current investors from a higher dividend or a more robust share-repurchase program now.

In late February, Citigroup's Banamex unit in Mexico made the news when it alleged the unit had been defrauded by an oil-services company, causing losses of as much as $400 million and forcing the bank to restate 2013 results.

Soon after, Citigroup reported it had discovered a smaller potential fraud at another company that dealt with Petróleos Mexicanos, or Pemex, Mexico's state-owned oil company.

Soros opened a CitiGroup position in 2010.  He's now exited all shares.

J.P. Morgan Chase: fines upon fines
The 2012 "London Whale" fiasco caused a stir, costing the bank about $6.2 billion, along with another $1 billion regulatory fine. Two former traders became targets of criminal charges. The mishap tarnished the image of CEO Jamie Dimon, with Wall Street now questioning whether Dimon (or anyone else for that matter), can run the far-flung operation.

According to New York Post, as many as 10,000 more job cuts are planned for 2014 in addition to previously announced layoffs; a result of shrinking business lines and heavy regulatory oversight.

In October 2013, JPMorgan Chase reported its first quarterly loss during the Dimon tenure, with results weighed down by $7.2 billion in legal costs. Then the bank missed 2014 first quarter earnings big-time.

Source: Wikipedia / Harald Dettenborn.

Evidently, Soros Fund Management LLC had seen enough.  Despite just adding JPMorgan shares in 4Q 2013, the fund ditched all shares at the end of March.

US Bancorp: a different story
This bank is known for a long history of conservative management and prudent underwriting standards.

In 2008, US Bancorp didn't need Federal Trouble Asset Relief Program money, but took $6.6 billion after pressured to do so, then paid it back immediately when afforded the chance.

Since that event, the most newsworthy item around the bank is....there isn't any news. This is just the way Warren Buffett likes it. He added more shares as reported in the most recent 13-F filing.

USB simply builds its deposit base, makes good loans, and collects bank fees. In turn, senior leadership rewards shareholders with a steadily rising dividend and aggressive stock repurchase plan. US Bancorp targets 60-80% of its earnings to shareholder return-of-capital.

Wells Fargo & Co.: Buffett's darling
Wells Fargo equity is Warren Buffett's biggest investment; and Mr. Buffett is Wells' biggest shareholder. He has afforded management consistent praise. Indeed, Wells Fargo used the financial crisis to build assets, including stealing Wachovia Bank right out from under CitiGroup. By most measures, Wells' has become the nation's best megabank. Management targets 40% of earnings to a cash dividend, and an additional 15-35% to share repurchase.

Similar to USB, investors learned Wells' didn't want or need Federal bailout money, either.

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Saturday, May 24, 2014

The 10 Most Stolen Luxury Cars

NEW YORK (TheStreet) -- Getting your car stolen is a terrible experience. Not only are you losing (possibly) you main method of transportation, but you're also out a significant amount of money. When you spent upward of $30,000 on a car, you stand to lose a lot if someone decides to steal it.

This top ten list shows which luxury vehicles are stolen the most, and how many of them were stolen between 2009 and 2012. The numbers come from the National Insurance Crime Bureau. For some reason, it seems that criminals really like German luxury cars, with fully half of the list coming from German manufacturers BMW and Mercedes-Benz.

10. Mercedes-Benz S Class, 163 stolen

With 163 vehicles stolen between 2009 and 2012 the Mercedes-Benz S-Class comes in at the bottom of the list. It's also the most expensive car from Mercedes-Benz to make it on the list, with two less expensive sedans taking higher spots. The S-Class starts at $92,900 and currently only comes in one model, the S550. The 2014 S550 comes with a 4.6L biturbo V-8 engine with 449 horsepower. Possibly contributing to its low rank on the list is the standard Mercedes-Benz mbrace2 that turns the car into a Wi-Fi hotspot and lets drivers control some aspects of the car from their smartphone.

9. Lexus IS, 117 stolen

The Lexus IS is ninth on the list with 117 vehicles stolen between 2009 and 2012.

The 2014 Lexus IS line starts at $36,100 with the IS 250, though the most expensive model, the IS 350 F Sport, starts at $43,585. Between those two models are the IS 250 F Sport that starts at $39,565, and the IS 350 that starts of $36,615. Engine options include a 2.5L, 3.5L, and a 5.0L option, with horsepower ranging from 204 HP to 416 HP.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

8. Acura TSX, 190 stolen

Eighth on the list of most stolen luxury cars is the Acura TSX, which was stolen 290 times from 2009 to 2012.

The Acura TSX is the cheapest car on this list, with the base model starting at $30,635. That's still a lot to spend on a car for most people, though. That base model sedan comes with a 2.4L engine with 201 HP. Acura offers an option to upgrade to a 3.5L engine with 280 HP. There's also a station wagon option that starts at $31,985.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

7. Lincoln MKZ. 226 stolen

The Lincoln MKZ makes it to number seven on the list with 226 vehicles stolen from 2009 to 2012.

The only car from Lincoln to appear on the list, the Lincoln MKZ starts a $35,190 for the base model. The base MKZ has a 2.0L, 240 HP engine. The next step up comes with a 3.7L V6 engine with 300 HP for $36,420.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

6. BMW 5 Series, 256 stolen

At number six is the BMW 5 Series, which was stolen 256 times between 2009 and 2012.

Starting at $49,500 The BMW 5 Series is the more expensive BMW vehicle on the list. The 5 Series can come with a 2.0L, 3.0L, or 4.4L engine, with horsepower ranging from 240 HP to 445 HP. For the 2014 model BMW currently offers a total of seven different models of for the 5 Series: Sedan, Touring, Gran Turismo, xDrive Sedan, xDrive Touring, M5 Sedan, and ActiveHybrid.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

5. Cadillac CTS, 326 stolen

The Cadillac CTS was the fifth most stolen luxury car in the U.S. between 2009 and 2012, with criminals taking 326 of them in a few years.

The 2014 Cadillac CTS starts at $34,495 for the base model vehicle. It can come with a 2.L, 3.0L, or 3.6L engine, with horsepower ranging from 270 HP to 420 HP. Cadillac currently offers six models in the CTS line: CTS Coupe, CTS-V Coupe, CTS Sedan, CTS-V Sedan, CTS Sport Wagon, and CTS-V Wagon.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

4. Mercedes-Benz E Class, 381 stolen

From 2009 to 2012 car thieves stole a total of 381 Mercedes-Benz E-Class sedans. Fittingly, the middle-of-the-pack Mercedes-Benz sedan in terms of price also falls between its brethren on this list, and fourth overall.

The E-Class Sedan starts at $51,400 for the base model. It's the only hybrid car that Mercedes-Benz currently offers, though only one of its six models offers a hybrid engine. The E-Class also comes in a diesel model for those who prefer it.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

3. Infiniti G Series, 405 stolen

Third on the list of most-stolen luxury cars is the Infiniti G Series. A total of 405 G Series cars were stolen between 2009 and 2012.

The G Series follows the general trend of less expensive cars being stolen more often. The base model 2014 G37 Journey starts at $32,950. The Infiniti G37X AWD costs a bit more, starting at $34,550. Both vehicles have a 3.7L V6 engine with 328 HP, with the main standard difference being the all-wheel drive available in the latter model.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

2. BMW 3 Series, 471 stolen

The BMW 3 Series comes in at a close second on this list with a total of 471 cars stolen between 2009 and 2012. Unfortunately, we don't know the breakdown by model, so we can't say if the hybrid, sedan, or convertible is more likely to get stolen.

The current 2014 model of the BMW 3 Series starts at $32,750 making the less expensive of the two BMW cars on this list. The car is available with either 2.0L or 3.0L, with horsepower ranging from 180 HP to 335 HP. BMW offer five different models of the 3 Series include the aforementioned Sedan, ActiveHybrid, Convertible, as well as the Touring and Gran Turismo.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

1. Mercedes-Benz C Class, 485 stolen

With 485 vehicles stolen, the Mercedes-Benz C Class is the most stolen luxury vehicle in America. Of those 485 cars stolen, only 78 of them were never recovered.

Mercedes-Benz makes six different models of the C-Class, with the least expensive model starting at $35,800. It's the cheapest of the three sedans the company makes, all of which appear elsewhere on this list. We don't know why criminals prefer the C-Class, but if you're looking into one you might want to invest in a few security features.

Must read: The 10 Most Expensive Cars Ever Sold At Auction

Thursday, May 22, 2014

H-P closes in the red as results come out early

Getty Images

SAN FRANCISCO (MarketWatch)—Technology stocks were mostly higher Thursday, but Hewlett-Packard Co. gave up its gains after the tech giant disappointed investors with its quarterly results that came out shortly before the close of trading.

H-P (HPQ)  ended the day down by 2.3% at $31.78 after the company reported a fiscal second-quarter profit of $1.27 billion, or 66 cents a share, on revenue of $27.3 billion. Excluding one-time items, H-P would have earned 88 cents a share, which met the estimates of analysts surveyed by FactSet.

H-P also said it would cut an additional 11,000 to 16,000 jobs on top of the 34,000 job cuts it already announced as part of a restructuring plan.

Also getting notable attention Thursday was JD.com (JD) , which rose 10% to $20.90 as the Chinese online retailer made its debut as a publicly traded company.

/quotes/zigman/12633936/realtime COMP 4,154.34, +22.80, +0.55% Nasdaq Composite Index

With H-P and JD in the spotlight, the tech-heavy Nasdaq Composite Index (COMP)  rose almost 23 points to close at 4,154. The Morgan Stanley High Tech 35 Index (MSH)  and the Philadelphia Semiconductor Index (SOX)  were up a fraction.

Facebook (FB)  ended the day with a gain of 3 cents a share to close at $60.52 after Evercore Partners raised its rating for the social network to overweight.

TiVo Inc. (TIVO)  shares rose 1.5% to close at $11.93 prior the digital TV technology company reporting its first-quarter results. TiVo ended up delivering a profit of $8.1 million, or 7 cents a share, after reporting a loss in the same period a year ago.

On the downside, Twitter (TWTR) , Microsoft (MSFT) , IBM Corp. (IBM)  and eBay Inc. (EBAY)  all closed in the red.

Other must-read stories from MarketWatch:

Housing coming out of its deep freeze

JD.com IPO a hit, seen as proxy for Alibaba

Tuesday, May 20, 2014

Home Depot: May Sales Rise But…

Amid the slaughter in stocks today, there’s been a glimmer of home: Home Depot (HD).

AJ Mast for the Wall Street Jour

The home-improvement retailer’s shares of popped today despite missing earnings forecasts after Home Depot said its May sales had been “robust.” Janney’s David Strasser and team offer a “but:”

We feel the need to add a “But” to the conversation. In Q1, big ticket growth decelerated a decent amount impacted by bad weather as OPE and roofing categories were affected. This was offset, to some degree, by unprecedented damage from burst pipes and other home improvement jobs needed after the winter. Now heading into Q2, before getting too excited about the robust sales trends, we need to better understand whether the strength is predominantly seasonal, and whether the big ticket deceleration of the last 2 quarters is weather related or housing related. We do not want to be overly critical, but HD’s stock price, for the remainder of the year, will largely depend on whether the Company can offset the slowdown in housing turns. Big ticket sales provide a key indicator of its ability to continue this strong sales growth. Several vendors have highlighted moderation in bigger ticket categories and we worry whether its indicative of a broader slowdown…We are not betting against HD, but we are concerned about betting with the housing cycle. Home prices have improved and are stabilizing, which will help, but there are several headwinds including negative turnover, higher rates, lower ownership, tight credit and slowing GDP/income levels.

Canaccord Genuity’s Laura Champine and Jason Smith prefer Home Depot to Lowe’s (LOW):

We continue to favor Home Depot over Lowe's. We view HD's execution in merchandising and in stores as superior, and we think HD will continue gaining share.

Shares of Home Depot have gained 1.7% to $77.80, while Lowe’s has dipped d0.1% to $45.52.

Monday, May 19, 2014

FCC mulls calls on planes after flood of comments

With the roar of 1,400 people ringing in its ears, the Federal Communications Commission can now decide whether to allow cellular service on planes.

The deadline was Friday for comments about lifting a 1991 ban on airborne cellular service. Opposition was nearly unanimous, with messages ranging from hand-scrawled diatribes to multipage rants.

"This is the worst idea ever," wrote John Simpson of San Francisco. "It is already bad enough with people talking on their phones everywhere but most of the time one can move away from the idiot; on a plane you are stuck."

Frank Wake of Anchorage told the commission, "This is a very bad idea." If the ban is lifted, Wake said, it will become "cruel and unusual torture for those of us trapped."

But a relative handful of respondents supported cellular service. Thomas Elsner of Wheaton, Ill., said allowing more mobile networks on flights would drive down Internet costs and provide better service than the current Wi-Fi networks.

"But most important, this would give the power back to the consumers," Elsner wrote.

Now the FCC must review the comments and could vote to lift the 1991 ban on cellular service, which was created to avoid jamming ground stations. No schedule is set for taking action.

"The staff is going to go through the reply comments and the docket to see if they can discern a consensus or a possible consensus," said Angela Giancarlo, a former FCC staffer who is now a partner at Mayer Brown law firm in D.C. "On a good day, no one is surprised by the outcome."

FCC Chairman Tom Wheeler told a House panel that he wanted to lift the ban during 2014 because the rationale for the rule doesn't exist any more.

The process now is for commission staffers to review all of the comments and determine whether to draft an order for the commission to vote on.The commission could also hold an educational meeting with technical advisors, but nothing has been scheduled yet. The review could take months, but there is no firm t! imetable.

Even if the FCC lifts its ban, the Transportation Department is expected to regulate cell service aboard planes. The department already collected 1,774 of its own comments in preparation for rule-making.

Flight attendants, for example, are strongly opposed to allowing calls. Some airlines have said they wouldn't allow calls, even if the ban is lifted, while others said they would consider it.

Congress is also mulling legislation to block calls on planes. The House Transportation Committee approved a bill to ban phone calls on plans, and similar legislation was introduced in the Senate.

But FCC approval of cell service isn't assured. The 3-2 majority that agreed in December to gather comments includes a commissioner, Jessica Rosenworcel, who doesn't support allowing phone calls on planes.

The 4,000 comments, mostly negative, have been posted, but the FCC hasn't yet posted last-minute filings from industry groups that requested the extended comment period: AeroMobile, which provides cellular service on planes in the Europe and the Middle East; manufacturer Panasonic Avionics Corp. and CTIA-The Wireless Association.

In an earlier filing, CTIA said its companies are eager to provide mobile service to their customers that follows all FAA rules and airline policies.

Sunday, May 18, 2014

Reports: Pfizer may raise bid for AstraZeneca

Several published reports Sunday said Pfizer is considering raising its $100 billion-plus offer for British-based AstraZeneca as it races to meet a May 26 deadline under United Kingdom takeover rules under which it must make a formal possibly hostile bid or walk away.

M&A frenzy as Pfizer amasses AstraZeneca critics

A story on The Wall Street Journal's website cited anonymous sources close to the matter as did Reuters news service. AstraZeneca has already rebuffed Pfizer more than once and a mammoth merger of the two pharmaceutical giants could be doomed if the latest advance is rejected, the stories said.

Pfizer -- the maker of erectile dysfunction drug Viagra, among other blockbuster drugs -- first approached AstraZeneca, which makes cholesterol drug Crestor, among others, last year and most recently -- April 28 -- made a cash-and-stock bid of nearly $106 billion to join forces. Despite a 30% runup in its stock price so far this year based on speculation about the merger, AstraZeneca promptly rejected the bid.

AstraZeneca said it concluded that the proposal "very significantly undervalued" the company "and its prospects."

Pfizer wants to merge with AstraZeneca to form a British-based holding company with management in New York and London. The shares would continue to trade on the New York Exchange here.

Ultra-low interest rates have been the catalyst for a number of mergers and acquisitions within the pharmaceutical industry recently. Earlier this year, Swiss drugmaker Novartis agreed to swap its vaccine business for GlaxoSmithKline's cancer drug unit and sold its veterinary drug arm to Eli Lilly.

One big driver for joining forces is to cut costs as brutal competition from generic drug makers intensifies. Some of the biggest drug makers are being hit by revenue declines as their blockbuster drugs of recent decades lost patent protection.

Saturday, May 17, 2014

Goldman Sachs Really, Really Likes Kinder Morgan

The market is getting hammered today. Shares of Kinder Morgan (KMI), however, have bucked the trend thanks to a positive report from Goldman Sachs.

Reuters

Goldman Sachs analyst Theodore Durbin and team explain why they added Kinder Morgan to their Conviction Buy List:

After a large wave of long-haul natural gas pipeline construction across North America in the 2007-2011 timeframe, construction has slowed significantly over the last several years. We believe the midstream industry is now entering a new wave of long-haul natural gas infrastructure investment focused on supply and demand opportunities, including Appalachia takeaway, gas-fired power generation, LNG, and Mexico exports. As the largest gas pipeline operator in North America, we expect Kinder Morgan will win multiple growth projects in coming years. Kinder has identified $15bn of potential natural gas growth projects, of which only $2.7bn is in its current backlog as of its late January analyst day, and we therefore see large potential upside to its organic growth capital spending in gas alone.

Kinder also provides well diversified, highly stable, fee-based cash flows and solid 8-10% annual dividend growth. We believe shares are attractively valued on an absolute basis, and relative to peer midstream C-corps.

Shares of Kinder Morgan have gained 0.9% at 3:02 p.m. today, while Kinder Morgan Partners (KMP) has risen 0.6% to $75.42.

Barron’s, by the way, is not a fan of Kinder Morgan.

Thursday, May 15, 2014

Hail This Taxi Dividend Stock for a 6.9% Yield  

RSS Logo Lawrence Meyers Popular Posts: 3 Cash Cow Stocks to Buy: Timeshare StocksShould You Buy These 2 High-Yield REITs?3 Covered Calls for a Cool $1,000 in Income Recent Posts: Hail This Taxi Dividend Stock for a 6.9% Yield   3 Covered Calls for a Cool $1,000 in Income Should You Buy These 2 High-Yield REITs? View All Posts

There are some stocks whose underlying businesses are just so clever that I have to love them, especially if they involve any kind of creative financing product. It's even better if it's a solid and sustainable dividend stock.

Medallion Financial Group TAXI 185 Hail This Taxi Dividend Stock for a 6.9% Yield   That's the case with Medallion Financial Corporation (TAXI). This neat little company is primarily focused on the financing of taxi cab licenses in major cities like New York. It does other specialty lending as well — such as asset-backed loans for luxury vehicles like boats and art. But its bread and butter has been the taxi business.

Most cities in the U.S. only permit a limited number of taxicab licenses. That’s about as anti-free-market as you can get. The result of limited supply of anything is that the price will rise. In the case of taxicab licenses, the price in New York is more than a million bucks. So unless someone has their own financing, such as a taxi fleet owner, then they will need to get that license financed.

Medallion is just such a financier. Even better, the collateral is as solid as you'll find. It's a license in a business sector that has enforced restricted supply. It isn't the taxi car itself, it's the license. The income generated from interest payments is incredibly solid, making TAXI stock a reliable dividend stock.

There are only two threats to the business model. First, if the pricing of medallions should fall, new supply could drive the price down. In that case, the interest that TAXI collects on loans would decline over time, unless it bumped up its LTV ratio. The company could likely do this, however, because the default rate on medallion loans is at an all-time low — a primary reason why the dividend yield is reliable.

And pricing isn't likely to be an issue. NYC just held an auction recently and medallion prices hit record levels.

The second threat would be if some kind of competition threatened the revenue generated by taxi services. If revenue were to fall, then interest and principal interests be jeopardized, and the overall value of a medallion would also fall, because expected lifetime revenue would decline. Thus the yield of this dividend stock might also be in trouble.

Uber could be that competition.

Except Uber isn't really providing competition to TAXI stock's model. Of TAXI’s medallion loans, 78% are based in NYC. UBER, however, is not real competition for NYC taxis. Instead, the e-hail company is targeting the privately-dispatched cars that are often used by those in other boroughs. UBER's pricing in Manhattan is often multiples of what cabs charge. They may see an upsurge when weather is bad, but that's because all the cabs are occupied.

There is only one thing about TAXI stock that I don't like. Management has made investments in Richard Petty Motorsports, and a minor league lacrosse team. These investments make absolutely no sense at all. I see no connection between these investments and anything involving specialty lending. President Andrew Murstein has always wanted to own a sports franchise, but I don't see why he's using stockholder money to do so.

With a stable portfolio of medallion loans, and a growing specialty lending business, including for taxi repair facilities, TAXI stock is in great shape. It just raised its dividend yield to 96 cents per year from 88 cents, up to a 6.9% dividend yield. So if you’re looking for income, you’ll have a tough time beating this dividend stock.

Like what you see? Sign up for our Dividend Insights e-letter and get income investment advice delivered to your inbox every Friday!

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities, but he does love NYC cab drivers. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets at @ichabodscranium.

Wednesday, May 14, 2014

Alibaba Target ChinaVision's Shares Fall 6.5% After Asset Deal Denied

Shares in ChinaVision Media, a media and program content production company that Chinese e-commerce giant Alibaba Group tentatively agreed to buy 60% of in March for HK$6.2 billion, or $800 million, fell by 6.5% in Hong Kong on Tuesday in a second day of volatile trading.

Shares soared by 17% on Monday amid apparent speculation that Alibaba may transfer sell some of its assets to the company.

ChinaVision said in a statement at the Hong Kong Stock Exchange on Monday after the close of trade that "whilst there have been preliminary discussions between the Company and Alibaba in relation to the future development of the Group, so far there was no discussion in relation to any assets injection by Alibaba" into ChinaVision Media.

ChinaVision Media's shares have nearly tripled since the company announced on March 11 that Alibaba had agreed to purchase a controlling stake.   The purchase, which is subject to shareholder approval, would potentially expand Alibaba's user base. 

Alibaba last week filed for an IPO in the U.S. that may be the world's largest ever.

– Follow me on Twitter Twitter @rflannerychina

 

 

Monday, May 12, 2014

Thinking About Education Costs in Your 50s or Older

B51J3D Man Looking at BillsGetty Images Dealing with the costs of education isn't just a task for the young anymore. Even for those 50 or older, student-loan debt has become a key concern, with the latest figures from the Federal Reserve Bank of New York showing that those ages 50 to 59 had $112 billion in outstanding student loans -- almost 12 percent of all student debt -- while those 60 and older had $43 billion in student loans. Moreover, default rates among those 50 or older have jumped sharply in the past eight years, with 60-plus borrowers seeing default rates double from 6 percent in early 2005 to 12.5 percent at the end of 2012. Older Americans face unique financial challenges that can make repaying educational debt more difficult. Yet as college costs rise, many people older than age 50 want to try to help their children and grandchildren with educational expenses to avoid seeing future generations burdened with heavy debt. Let's examine to some ways older Americans can achieve both of those goals. 1. Recognize the Danger of Debt. The student-loan burdens that those 50 or older face are often much more difficult than those for their younger counterparts. With much of the debt they take on representing parental loans or cosigned loans for children and grandchildren, they often lack the flexibility in repayment terms that younger borrowers enjoy. Most private loans and parental loans don't offer income-based repayment options or other ways of reducing monthly payments, yet bankruptcy and other options of last resort won't get rid of them. Last year, reported that 119,000 retired Americans were having part of their Social Security benefits garnished to repay student loans. Make sure you understand the terms that govern tyour deb. Know your repayment options and prioritize the most burdensome loans first before turning to loans with more favorable rates and terms. That will give you the best chance to get your debt under control while you're still in a position to deal with it. 2. Don't Sacrifice Your Own Financial Future. When you hit your 50s, you're really reaching crunch time in terms of providing for your retirement. As your earnings peak, you'll never have a better time to put large amounts of savings toward that nest egg.

Sunday, May 11, 2014

Is Target Stock a Dividend Darling or Deadbeat?

Facebook Logo Twitter Logo LinkedIn Logo Google Plus Logo RSS Logo Charles Sizemore Popular Posts: 5 Indispensable Retirement REITs10 Potential Short Selling Candidates for 2014Disney Stock Is Vulnerable Despite EPS Beat Recent Posts: Is Target Stock a Dividend Darling or Deadbeat? Treasury Yields Aren’t Going Anywhere – Try Walmart, Target Stock Instead Disney Stock Is Vulnerable Despite EPS Beat View All Posts

Target (TGT) can't seem to do much right these days.

The Target CEO resigned in disgrace as the fallout from the credit card security breach last year continues to build. Sales are down at TGT, as customers have been timid about swiping their cards at Target, fearing their data could be compromised again. And Target's expansion into Canada 14 months ago has proven to be an unmitigated disaster f0r TGT stock, generating roughly a billion dollars in losses so far.

At a time when brick-and-mortar rival Walmart (WMT) is gaining ground on Amazon.com (AMZN) in online sales, Target's online presence hasn’t amounted to much. Up until as recently as 2011, Target depended on Amazon for site hosting and fulfillment.

Yet while Target has had its share of operational setbacks of late, Target stock has been the shining light of shareholder friendliness. Target has raised its dividend every year since 1967 — a run of 47 years and counting — and it has also been a serial share repurchaser. Since 2002, Target has reduced its shares outstanding from 1.3 billion to just 638 million as of its last reporting. That's a reduction of 44% in TGT stock.

Target Shares Outstanding Is Target Stock a Dividend Darling or Deadbeat?

Target stock dividend table Is Target Stock a Dividend Darling or Deadbeat?Let's return to Target's dividend growth. The TGT dividend has grown by 19% over the past year, which would be good news by itself. But what is truly impressive is the consistency. Target has grown its dividend by a compound annual rate of 20% for the past 10 years. And going back 20 years, it's a not-too-shabby 13%.

Think about the past 10-year period. It's been a never-ending string of crisis with one of the worst recessions in U.S. history in the middle. Yet Target stock still managed to raise its dividend at a 20% annual clip.

To put that in perspective, at a 20% growth rate, the dividend doubles every three-and-a-half years.

Today, TGT stock pays a quarterly dividend of 43 cents, or $1.72 per year. That works out to a dividend yield of 2.9% at current prices. That may not be an eye-popping yield, but it’s significantly higher than what can can expect from the 10-year Treasury bond, which yields 2.6%.

Let’s have a little fun with the numbers: Let’s say that Target continues to raise its dividend by 20% a year. That $1.72 annual payout would grow to $10.65 over 10 years. You effective dividend yield on your cost basis would be 18%. And this, of course, says nothing about capital appreciation or dividend reinvestment.

OK, Target is in something of a rough patch right now; I get that. So maybe 20% annualized dividend growth isn’t realistic. Let’s say something more along the lines of Target’s 20-year average of 13% is more likely. That $1.72 annual dividend still grows to $5.83 over 10 years, giving you a 10.0% dividend yield on your original cost basis.

Bottom Line

Should you run out and buy TGT stock today? Based on valuation, I would say that you certainly could. Target stock is priced at just 12 times forward earnings and 0.5 times sales, although a better approach might be to average in over the course of a few months.

It’s too early to know whether the bloodletting in Target stock is over; should Mr. Market not like the new CEO when announced, we could easily see another round of selling. But if you’re looking to buy a dividend-raising superstar to fund your retirement, put some Target stock in your shopping cart.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long WMT. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today's best global value plays.

Thursday, May 8, 2014

10 Best Consumer Stocks To Invest In Right Now

It's not a perfect world out there for investors, but things may be starting to get better.

The Dow and S&P 500 both hit new highs last week as investors shrugged off uninspiring global economic news to push the leading market gauges higher.

I recently went over some of the companies that are expected to post lower quarterly profits when they report this week. Thankfully, they're the exceptions and not the rule.

Let's go over some publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.

Company

Latest Quarter EPS (estimated)

Year-Ago Quarter EPS

Consumer Portfolio Services (NASDAQ: CPSS  )

$0.11

$0.02

Joe's Jeans (NASDAQ: JOEZ  )

10 Best Consumer Stocks To Invest In Right Now: Winnebago Industries Inc.(WGO)

Winnebago Industries, Inc. manufactures and sells recreation vehicles primarily for leisure travel and outdoor recreation activities. The company offers motor homes, which are self-propelled mobile dwellings that provide living accommodations for approximately seven persons and include kitchen, dining, sleeping, and bath areas, as well as a lounge; and optional equipment accessories, such as generators, home theater systems, king-size beds, upholstery, and interior equipment. It manufactures motor homes constructed directly on medium- and heavy-duty truck chassis, which include engine and drivetrain components; and on van-type chassis onto which the motor home manufacturer constructs a living area with access to the driver's compartment under the Winnebago and Itasca brand names, as well as panel-type vans with sleeping, kitchen, and/or toilet facilities under the Era brand name. The company also produces original equipment manufacturing parts, including extruded aluminum and other component products for other manufacturers and commercial vehicles. Winnebago Industries markets its motor homes through independent dealers primarily in the United States and Canada. The company was founded in 1958 and is headquartered in Forest City, Iowa.

Advisors' Opinion:
  • [By John Udovich]

    The CEO of recreation vehicle (RV) stock Winnebago Industries, Inc (NYSE: WGO) recently appeared on CNBC to say that the economy is improving for RV makers, meaning its time to take a closer look at the stock plus take a look at the performance of other small cap RV stocks like Drew Industries, Inc (NYSE: DW), Skyline Corporation (NYSEMKT: SKY) and Thor Industries, Inc (NYSE: THO).

  • [By John Kell and Lauren Pollock var popups = dojo.query(".socialByline .popC"); ]

    Among the companies with shares expected to actively trade in Thursday’s session are Citigroup Inc.(C), GameStop Corp.(GME) and Winnebago Industries Inc.(WGO)

  • [By Grace L. Williams]

    Recreational vehicle maker Winnebago Industries (WGO), which makes, you know, Winnebagos, is trucking today after reporting strong revenue and increased demand in its fourth quarter.

    AP

    For the period ended Aug. 31, Winnebago reported profit of $10.6 million, or 38 cents a share, down from $40.9 million, or $1.41 a share, a year earlier, while sales rose to $214.2 million in the quarter. Analysts polled by Thomson Reuters recently predicted earnings of 28 cents a share and sales of $206 million.

    Looking at the solid quarter and optimistic forecasts, Citigroup analyst Gregory Badishkanian raised estimates after noting several positive factors at the company including the current backlogs, which more than doubled, and dealer inventories, which were up 38%. He writes:

    The company highlighted two issues that appear to be diminishing: 1) towables division was dilutive for the year, but headed in the right direction with a breakeven quarter 2) shortage in Class A Gas chassis, though the issue should be resolved by mid-winter…

    Given strong margin and retail demand trends, we��e raising our 2014 and 2015 estimates by 26 cents each. We introduce our 2016 estimate of $ 1.60.

    Shares of Winnebago have gained 4.4% to $28.47 today at 3pm. Thor Industries (THO), which also makes recreational vehicles, has ticked up 0.1% to $57.56, Drew Industries (DW) has risen 0.3% to $48.74, Arctic Cat (ACAT) has advanced 1% to $59.87 and Polaris Industries (PII) has fallen 0.3% to $132.08.

  • [By David Sterman]

    I took a close look at all of the companies that appeared in the first part of this series, and there were some great companies in the mix. If price were no object, I'd be a huge fan of:

    Oceaneering (NYSE: OII), which is prospering form the ongoing trends toward undersea naval warfare and undersea oil drilling. Oceaneering is poised to grow at a sustained double-digit pace, which is something few other defense contractors can say. Cree (Nasdaq: CREE): LED lighting is a revolutionary game-changer, and Cree's heavy emphasis on R&D is leading the charge towards ever-lower prices for these low-energy light sources that also have remarkable longevity compared to regular bulbs. Still, profit margin gains may be tough in a very competitive environment.  Polaris Industries (NYSE: PII): If Winnebago's (NYSE: WGO) recreational vehicles are suitable for retirees, Polaris has become the go-to name for activity-oriented vehicles. Notably, it has a revenue base that is four times larger than Winnebago as well. If S&P wants to position for future demographic trends, then Polaris is a great choice.

    I love these companies, but I don't love their stock prices, and I'd prefer to wait for some sort of pullback before singing their praises. That said, there are two investment ideas that hold great appeal on their own. If they get added to the S&P 500, then they are also set up for a timely trade.

10 Best Consumer Stocks To Invest In Right Now: G Willi-Food International Ltd (WILC)

G. Willi-Food International Ltd., incorporated in January 1994, is engaged, directly and through subsidiaries, in the development, import, export, manufacturing, marketing and distribution of a range of over 600 food products worldwide. The Company purchases food products from over 150 suppliers located in Israel and throughout the world, including from the Far East (China, India, the Philippines and Thailand), Ethiopia, Eastern Europe (Poland, Lithuania, Bulgaria and Latvia), South America (Ecuador and Costa Rica), the United States, Canada, Western and Central Europe (the Netherlands, Belgium, Monaco, Germany, Sweden, Switzerland, Denmark, and France) and Southern Europe (Spain, Portugal, Italy, Turkey, Greece). The Company's products are marketed and sold to approximately 1,500 customers in Israel and around the world including to supermarket chains, wholesalers and institutional consumers. The Company markets most of its products under the brand name Willi-Food. On January 1, 2012, the Company completed the sale of its entire 51% ownership interest in Shamir and closed its manufacturing segment.

As of December 31, 2012, the Company�� customers includes the Israeli supermarket chains in the organized market in Israel, which includes Shufersal Ltd. (including the chains: Shufersal Deal, Shufersal Deal Extra, Shufersal Sheli, Shufersal, Yesh, Shufersal Express and Katif); Mega Retail Ltd. (which also includes Mega, MegaBool, Mega in the City and Zol B'Shefa), and Co-Op Israel (which also includes Co-Op Jerusalem, Mister Zol and Pashut Zol). The Company contracts with the supermarket chains in the organized market through the buyers in the head office of the supermarket chain, and then the Company receives orders from the logistic center or directly from their stores. Merchandise is then delivered directly to each branch or to the supermarket�� chain distribution center. Its secondary major group of customers includes private supermarket chains, mini-markets, wholesalers, food manufac! turers, institutional consumers, such as catering halls, hotels, hospitals and food service companies and food producers, and customers in the Palestinian Authority.

.

The Company�� imports, markets and distributes a range of over 600 food products. These products are sold by the Company and by Gold Frost. The principal products in the import segment product line are Canned Vegetables and Pickles, including including mushrooms (whole and sliced), artichoke (hearts and bottoms), beans, asparagus, capers, corn kernels, baby corn, palm hearts, vine leaves (including vine leaves stuffed with rice), sour pickles, mixed pickled vegetables, pickled peppers, an assortment of black and green olives, garlic, roasted eggplant sun and dried tomatoes. These products are primarily imported from China, Greece, Thailand, Turkey, India, and The Netherlands; canned fish, including tuna (in oil or in water), sardines, anchovies, smoked and pressed cod liver, herring, fish paste and salmon. These products are primarily imported from the Philippines, Thailand, Greece, Germany and Sweden; Canned Fruit, including pineapple (sliced or pieces), peaches, apricot, pears, mangos, cherries, litchis and fruit cocktail. These products are primarily imported from China, the Philippines, Thailand, Greece and Europe.; Edible Oils, including olive oil, regular and enriched sunflower oil, soybean oil, corn oil and rapeseed oil. These products are primarily imported from Belgium, Argentina, Turkey, Italy, Holland and Spain; dairy and dairy substitute products, including hard and semi-hard cheeses (parmesan, edam, kashkaval, gouda, havarti, cheddar, pecorino, manchego, maasdam, rossiysky, iberico and emmental), molded cheeses (brie, camembert and danablu), feta, Bulgarian cheese, goat cheese, fetina, butter, yogurts, butter spreads, margarine, melted cheese, cheese alternatives, condensed milk, coffee whitener, pizzas, ice cream, whipped cream and others. These products are primarily imported from Greece, France, Latvia, Denma! rk, Bulga! ria, Italy, and The Netherlands.

Dried Fruit, Nuts and Beans, including figs, apricots, chestnuts, sunflower seeds, sesame seeds, walnuts, pine nuts, cashew nuts, pistachio and peanuts. These products are primarily imported from Greece, Turkey, India, China, Thailand and the United States, and other products, including, among others, instant noodle soup, Manchu, breadstick coffee creamers, lemon juice, halva, Turkish delight, cookies, vinegar, sweet pastry and crackers, sauces, corn flour, rice, rice sticks, pasta, spaghetti and noodles, breakfast cereals, corn flakes, rusks, couscous, rusks, gnocchi, tortilla, dried apples snacks, chocolate bars and chocolate paste, tea, deserts (such as tiramisu and pastries), light and alcoholic beverages (such as ouzo, sangria and mohito) and more. These products are primarily imported from The Netherlands, Germany, Romania, Italy, Greece, Belgium, the United States, Scandinavia, Switzerland, China, Thailand, Turkey, India, and South America.

The Company competes with Shemen, Taaman, Solbar, Fodor (Starkist and Yona), Posidon, Williger, Filtuna, Vita Pri HaGalil, Shastowits, Yachin-Zan laKol, Williger, Alaska, Johnson, Osem, Barila, Tomer, Tnuva, Tara, Strauss, Seyman, Gad Dairy, and Meshek Zuriel.

Advisors' Opinion:
  • [By GURUFOCUS]

    Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

    1. Avg. High Yield Price
    2. 20-Year DCF Price
    3. Avg. P/E Price
    4. Graham Number

    SYY is trading at a premium to all four valuations above. The stock is trading at a 37.5% premium to its calculated fair value of $26.26. SYY did not earn any Stars in this section.

    Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

    1. Free Cash Flow Payout
    2. Debt To Total Capital
    3. Key Metrics
    4. Dividend Growth Rate
    5. Years of Div. Growth
    6. Rolling 4-yr Div. > 15%

    SYY earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. SYY earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1970 and has increased its dividend payments for 43 consecutive years.

    Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

    1. NPV MMA Diff.
    2. Years to > MMA

    The NPV MMA Diff. of the $282 is below the $500 target I look for in a stock that has increased dividends as long as SYY has. If SYY grows its dividend at 3.6% per year, it will take 3 years to equal a MMA yielding an estimated 20-year average rate of 3.41%. SYY earned a check for the Key Metric 'Years to >MMA' since its 3 years is le

10 Best Supermarket Stocks To Watch Right Now: Zhongpin Inc.(HOGS)

Zhongpin Inc. engages in the processing and distribution of meat and food products primarily in the People?s Republic of China. The company provides pork and pork products, such as chilled pork, frozen pork, hog by-products and variety meats, and prepared meats; and vegetable and fruit products, including asparagus, sweet corn, broccoli, mushrooms, lima beans, strawberries, and capsicums. It sells its products fast food companies, processing factories, school cafeterias, factory canteens, hotels, army bases, and government departments, as well as directly to retail outlets, including supermarkets. The company also exports its products to Europe, Hong Kong, and other countries in Asia. As of December 31, 2010, it operated 157 showcase stores, 1,072 branded stores, and 2,097 supermarket counter locations. The company is headquartered in Changge City, the People?s Republic of China.

Advisors' Opinion:
  • [By Dan Caplinger]

    Obviously, the big news for Smithfield during the quarter came from Shuanghui International's offer to buy out the company for $34 per share. The $4.7 billion offer has raised some nationalistic concerns, as the Committee on Foreign Investment in the U.S. will have to approve the merger, but Smithfield CEO Larry Pope said last month when the deal was announced that it believes the deal won't have an effect on the company's operations. In fact, the combination of China's largest meat processor and the world's biggest pork producer could produce a formidable opponent to industry rivals. In particular, Chinese pork producer Zhongpin (NASDAQ: HOGS  ) will inevitably find itself under pressure if the deal goes through, as Shuanghui puts itself in a stronger competitive position in the industry.

10 Best Consumer Stocks To Invest In Right Now: Winning Brands Corp (WNBD)

Winning Brands Corporation is a manufacturer of cleaning solutions. The Company offers products in three markets: Consumer, Industrial and Commercial. Its Consumer products include 1000+ Stain Remover; KIND Laundry Detergent; KIND Fabric Softener; KIND Laundry Stain Remover, and CLEAN1 All Purpose. Its Industrial products include TrackMoist Dust Suppressant, and ReGuard-4 Equipment Cleaning for Emergency Responders. Its Commercial products include Professional Wet Cleaning Solutions. The Company owns 100% interests in Niagara Mist Marketing Ltd.

The consumer products are offered for sale through stores in various sectors, such as hardware, paint, convenience, and grocery. The industrial products are targeted for sale through professional property maintenance personnel in the case of TrackMoist and distributors to fire-fighting organizations in the case of ReGuard-4. The commercial products are for use by businesses in their line of work to generate a finished product, with an emphasis on the dry-cleaning sector, such as on cruise ships to perform cleaning of Dry Clean Only garments in substitution of the solvent perchloroethylene (Perc).

Advisors' Opinion:
  • [By Peter Graham]

    Small cap stocks Beamz Interactive Inc (OTCBB: BZIC), EHouse Global (OTCBB: EHOS) and Winning Brands Corporation (OTCMKTS: WNBD) were all heading in different directions at the end of last week with the first small cap surging 49.94% while the other two sank 31.28% and 25.32%, respectively, on Friday. Moreover, all three small cap stocks are already heading in different directions again this morning. So where should investors and traders place their bets? Here is a closer look at all three small cap stocks:

10 Best Consumer Stocks To Invest In Right Now: Kroton Educacional SA (KROT3)

Kroton Educacional SA (Kroton), formerly Opportunity Officepar Participacoes SA, is a Brazil-based company active in the private education sector. The Company and its subsidiaries are engaged in the management of preschool, elementary, secondary and college preparatory schools, as well as higher, professional and post-graduation education, courses and other related educational activities. In addition, it is involved in the wholesale, retail, distribution, import and export of textbooks, course books, magazines and other publications related to preschool, elementary, secondary and adult education, as well as higher, professional and post-graduation education. Kroton operates in both the On-Campus and Distance Learning business, primarily through its 53 Postsecondary units and 447 active Undergraduate Distance Learning centers, as well as cooperates with approximately 800 Associated Schools in basic education. Advisors' Opinion:
  • [By Ney Hayashi]

    Anhanguera Educacional Participacoes SA (AEDU3) tumbled after Brazil�� antitrust regulator signaled it may limit the education company�� merger with competitor Kroton Educacional SA. (KROT3) Lojas Renner SA (LREN3) led retailers higher after a report showed Brazil�� industrial production expanded faster than expected in October, easing concern that growth is faltering.

10 Best Consumer Stocks To Invest In Right Now: Attitude Drinks Inc (ATTD)

Attitude Drinks Incorporated (Attitude), incorporated on May 10, 1988, is a brand-development company. The Company focuses on the non-alcoholic single serving beverage business, developing and marketing of milk based products in two segments: sports recovery and functional dairy. The Company does not directly manufacture its products but instead outsources the manufacturing process to third party packers.

Attitude has developed its second product, which is branded as Phase III Recovery is a milk-based protein drink which is available in chocolate and vanilla flavors. The Company�� co-packer for its dairy based product is O-AT-KA Milk Products Cooperative, Inc. in Batavia, New York. This product contains 35 grams of protein that are inherent in filtered milk. The product is packaged as a retort-processed shelf stable dairy-based 100% milk-based sports recovery drink in both chocolate and vanilla flavors.

The Company competes with The Coca-Cola Company and Pepsico Inc.

Advisors' Opinion:
  • [By Peter Graham]

    Small cap stocks Attitude Drinks Inc (OTCMKTS: ATTD), Axiologix, Inc (OTCMKTS: AXLX) and Unisource Corporation (OTCMKTS: USRC) have all been getting some attention lately in investment emails or investor alerts thanks in part to paid promotions. And while there is nothing wrong with properly disclosed paid promotions or investor relations activity, such activity can backfire on unwary investors or traders. With that in mind, here is a closer look at all three small cap stocks to help you decide whether they are truly hot or not:

10 Best Consumer Stocks To Invest In Right Now: Jones Soda Co.(JSDA)

Jones Soda Co., together with its subsidiaries, develops, produces, markets, distributes, and licenses premium beverages primarily in the United States and Canada. The company provides Jones Soda, a carbonated soft drink; Jones Zilch, a zero calories product in black cherry, pomegranate, and vanilla bean flavors; WhoopAss Energy Drink, an energy supplement drink; and WhoopAss Zero Energy Drink, an energy supplement drink with zero sugar. It also offers various products, including soda with customized labels, wearables, candy, and other items online. The company sells and distributes its products through its network of independent distributors and national retail accounts. Jones Soda Co. was founded in 1986 and is based in Seattle, Washington.

Advisors' Opinion:
  • [By John Udovich]

    Monster Beverage Corp (NASDAQ: MNST), a mid cap marketer and distributor of energy drinks and alternative beverages, has been a monster of a performer since the end of the financial crisis as the stock is up around 308% over the past five years, but could new or overlooked players like small cap beverage stocks�Jones Soda Co (OTCMKTS: JSDA), Celsius Holdings, Inc (OTCMKTS: CELH) and Konared Corp (OTCBB: KRED) repeat that performance? A look strictly at the long term performance of all three small caps might have you thinking otherwise. After all, none of these small cap beverage stocks are profitable while�the beverage industry can be a long hard expensive slog just to increase market share by one or two points when you are competing for shelf space with industry giants like Pepsi and Coke. But past performance is just that���the past and only part of the story as there is much more to consider about these small cap beverage stocks which could also make them potential acquisition targets by larger beverage players seeking to expand their product line up with innovative products:

10 Best Consumer Stocks To Invest In Right Now: Bright Horizons Family Solutions Inc (BFAM)

Bright Horizons Family Solution Inc., incorporated on May 9, 2008, provider of child care and early education services, as well as other services designed to help employers and families better address the challenges of work and life. The Company provides services primarily under multi-year contracts with employers who offer child care and other dependent care solutions as part of their employee benefits packages to improve employee engagement, productivity, recruitment and retention. The Company�� service offerings include Center-based full service child care and early education; back-up dependent care, and educational advisory services. As of June 30, 2012, the Company operated a total of 773 child care and early education centers across a range of customer industries with the capacity to serve approximately 87,400 children in the United States, as well as in the United Kingdom, the Netherlands, Ireland, Canada and India. In April 2013, it announced the acquisition of kidsunlimited, operator of nurseries throughout England and Scotland.

The Company�� curriculum adapts to the changing needs, interests, and abilities of each child in its care. The Company�� Great Places for Babies program provides a caring, welcoming environment where baby can grow from a bundle of joy to a bundle of curiosity. The Company develops a personal care plan for each infant based on his or her schedule, nutritional guidelines, and any other special attention he/she requires. The Company�� Growing World of Toddlers program uses hands-on exploration and social interaction in safe, engaging surroundings to help the child learn about his or her world. The Company�� back-up dependent care programs provide employees with a safety net for those days when regular arrangements fall through.

Advisors' Opinion:
  • [By Rich Smith]

    Watertown, Mass.-based Bright Horizons Family Solutions (NYSE: BFAM  ) , the international employer-sponsored child care and education company, is expanding its business in one country in particular this week. On Thursday, Bright Horizons announced that it has acquired Britain's kidsunlimited, operator of 64 nurseries in England and Scotland.

  • [By Rich Smith]

    The world is getting bigger for Bright Horizons Family Solutions (NYSE: BFAM  ) .

    On Monday, Bright Horizons announced that it has purchased Dallas-based Children's Choice Learning Centers, an operator of 49 employer-sponsored child care centers, primarily in the American Southwest, but also scattered across the U.S. "in regions that match well with Bright Horizons' existing network of centers."

10 Best Consumer Stocks To Invest In Right Now: Treehouse Foods Inc.(THS)

TreeHouse Foods, Inc. operates as a food manufacturer in the United States and Canada. The company?s products include non-dairy powdered creamers; private label canned soups; salad dressings and sauces; powdered drink mixes; and hot cereals, such as oatmeal, farina, and grits in single-serve instant packets and microwaveable bowls. It also offers macaroni and cheese; skillet dinners; Mexican and other sauces comprising salsa, picante, cheese dip, enchilada sauce, pasta sauce, and taco sauce; jams and pie fillings; pickles and related products, including peppers and pickled vegetables; aseptic products, such as cheese sauces and puddings; and refrigerated salad dressings and liquid non-dairy creamer products. The company offers pickles under the Farman?s, Nalley?s, Peter Piper, and Steinfeld brand names; sauces and syrups under the Bennett?s, Hoffman House, Roddenbery?s Northwoods, and San Antonio Farms brand names; non-dairy powdered creamer under the Cremora brand na me; refrigerated products under the Mocha Mix and Second Nature brand names; jams and other sauces under the E.D. Smith and Habitant brand name; oatmeal under the McCann?s brand name; and food away from home products under the Schwartz and Saucemaker brands. It primarily serves grocery retailers, mass merchandisers, and foodservice operators through various distribution channels, including retail grocery; foodservice distributors; and industrial and export channels comprising food manufacturers and repackagers of foodservice products. TreeHouse Foods, Inc. was founded in 1862 and is based in Oak Brook, Illinois.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Treehouse Foods (NYSE: THS  ) , whose recent revenue and earnings are plotted below.

10 Best Consumer Stocks To Invest In Right Now: V.F. Corporation(VFC)

V.F. Corporation designs and manufactures, or sources from independent contractors various apparel and footwear products primarily in the United States and Europe. The company offers apparel, footwear, outdoor gear, skateboard-inspired and surf-inspired footwear, backpacks, luggage, handbags and accessories, outdoor apparel, travel accessories, and women?s active wear primarily under the Vans, The North Face, JanSport, Eastpak, Kipling, Napapijri, Reef, Eagle Creek, and lucy brands; and denim and casual bottoms, and tops principally under Wrangler, Lee, Riders, Rustler, and Timber Creek by Wrangler brands. Its products also include occupational, athletic, and licensed apparel primarily under the Red Kap, Bulwark, Majestic, MLB, NFL, and Harley-Davidson brands; men?s fashion sportswear, denim bottoms, sleepwear, underwear, as well as handbags, luggage, backpacks, and accessories principally under the Nautica and Kipling brands; and denim and casual bottoms, sportswear, acce ssories, men?s apparel and footwear, and women?s sportswear primarily under the 7 For All Mankind, John Varvatos, Splendid, and Ella Moss brands. The company sells its products to specialty stores, department stores, national chains, and mass merchants primarily through its sales force, independent sales agents, and distributors. V.F. Corporation was founded in 1899 and is based in Greensboro, North Carolina.

Advisors' Opinion:
  • [By Andrew Marder]

    VF� (NYSE: VFC  ) , owner of The North Face, Wrangler, and Timberland brands, among others, has a plan. By 2017, the company wants to be pulling down $17 billion in annual revenue, while earning $18 per share. That's a 50% increase in revenue, and a 67% jump in earnings per share from where the company expects to end 2013. As a potential investor, I'm now all ears to learn how VF is going to make this dream a reality.

Tuesday, May 6, 2014

A Buying Opportunity in Check Point Software?

IT security company Check Point Software (NASDAQ: CHKP  ) delivered a good set of results recently, but its guidance disappointed and the stock took a hit. The company has long been known for its high profit margins and excellent cash flow, but the security marketplace is very competitive. Is Check Point starting to feel the heat from competitors like Fortinet (NASDAQ: FTNT  ) and Palo Alto Networks (NYSE: PANW  ) ? Or, is its guidance too conservative?

Check Point reports a good quarter
A brief look at the results indicates that Check Point's first-quarter earnings came in slightly better than the mid-point of its guidance:

Revenue of $342.2 million versus guidance of $330 million-$350 million Non-GAAP EPS of $0.84 versus guidance of $0.79-$0.86 Full-year guidance unchanged, with expected revenue of $1.45 billion-$1.50 billion and non-GAAP EPS of $3.50-$3.70 Second quarter guidance that is wider than the usual range, with expected revenue of $340 million-$375 million and non-GAAP EPS of $0.82-$0.90

The sticking point is clearly the second-quarter guidance, which predicts that revenue will come in between a 0.1% decline and a 9.6% increase compared to last year. That is a pretty big range, and it suggests a significant amount of uncertainty in the quarter.

Indeed, in discussing the outlook on the conference call, Check Point's management alluded to "some softness in international markets, particularly Asia." Europe was also cited as having a slow start, but this is possibly due to the last two quarters being strong for Check Point within the region. The Americas, which contributed 48% of revenue in the first quarter, continue to be strong, with North American product sales up an impressive 20%. 

Four reasons why Check Point is doing well
First, it usually makes sense to listen to what a management says about current trading conditions, but bear in mind that Check Point's guidance does tend to be a little conservative. While a slight pause in European growth is expected, the fact that North American growth remains strong is an indication that any "softness" is not due to a lack of competitiveness with rivals Fortinet and Palo Alto Networks. Check Point's products can't be losing their competitive edge if North America is doing well.

Second, the weakness in Asia is somewhat surprising. Check Point certainly wouldn't be the only IT company to report some weaker conditions in emerging markets, but its peers actually reported good growth in Asia. Fortinet generated 11% growth its Asia-Pacific revenue, and it claimed to have won a "seven-figure firewall deal" with a "large diversified telecommunications company," beating out Palo Alto, Check Point, and others in the process.  

As for Palo Alto, its Asia-Pacific revenue grew 42%, although its second quarter ended in January. Fools will be well advised to keep an eye out for Palo Alto's next results at the end of May for a better gauge on conditions in Asia.

Third, Check Point's underlying performance was pretty good in the first quarter. Total revenue grew 6%, while software growth remained strong. Note that the product and licenses figure includes software blade -- as distinct from software revenue -- subscriptions, sales that used to be included in Check Point's product sales line.


Source: Check Point Presentations, author's adjustment

As readers can see, Check Point underwent a superficially difficult period of product sales growth in 2012-2013, but the underlying picture was that its software blade sales were growing strongly. In fact, software blade sales grew nearly 26% in the quarter and now make up more than 35% of its product sales.

Fourth, its cash-flow generation continues to grow strongly. Management claimed that adjusted operating cash flow increased by 12.7% to $282 million in the first quarter -- noticeably more than the 6% rise in non-GAAP EPS. If you think that cash flow growth is more important than EPS, particularly with companies that are increasing their software-based sales, then Check Point is growing at a faster rate than its headline earnings suggest.

The bottom line
Check Point's guidance has possibly created a decent buying opportunity in a stock that is undoubtedly the value play in the IT security sector. On the other hand, the revenue range was widened in order to reflect some uncertain trading conditions. Cautious investors will want to monitor the IT sector for signs of general weakness in Asia and focus on what Fortinet and  Palo Alto Networks say in their next reports.

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